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World markets sell off on global worries

NEW YORK (CNNMoney) -- World markets sold off Friday, a day after the Dow industrials had its worst point loss since the 2008 financial crisis.

"I seems that yesterday was the day that markets finally woke up to the very real prospects of another imminent and major financial crisis," said Deutsche Bank analysts Jim Reid and Colin Tan, in a research note.

Heightening concerns in Europe, a monthly economic bulletin from Banco de Espana showed that the Spanish economy slowed down through the second quarter on its road to an already "moderate recovery." Gross domestic product grew 0.2% quarter-over-quarter, or 0.7% year-over-year.

Corporate earnings from two big European companies were also in play. Shares of Royal Bank of Scotland (RBS) fell more than 5% after the bank reported a wider-than-expected loss for the first half, but managed to erase its losses later in the session and were up by 1.4%.

On a brighter note, Italy's largest phone company, Telecom Italia (TI), reported earnings and revenue that topped forecasts. Shares of the telecom company jumped 13%.

In the United States, all three major indexes tumbled more than 4% Thursday and erased all their gains for the year. The indexes have also pushed into "correction" territory -- defined as a 10% drop from recent highs. The Dow (INDU), Nasdaq (COMP) and S&P 500 (SPX) have all fallen 10% in just the last 10 days.

On Friday, U.S. stocks whipsawed throughout the day, with the Dow swinging more than 400 points, after a strong report on American jobs surprised investors.